Thursday, April 30, 2020

Air India should be divested but not now: Analysts

Analysts and Industry watchers said that the while the Government should consider divesting its stake in Air India (AI), proceeding with the idea at this point in time will not be a wise decision.

The experts spoke to BusinessLine, a day after the Centre had announced that the last date for submission of Expression of Interest (EOI) in the State-owned carrier was being extended by two months to June 30.

When the divestment process had begun, towards the end of January 2020, senior Government officials indicated that they were hopeful of identifying a new owner for AI by June or July this year. But the recent extension implies that the timelines for finding a new owner for the national carrier will have to be re-drawn due to the impact of the coronavirus pandemic on the economy at large.

Lewis Burroughs, Head Aviation, India ICF is clear that AI’s sale is in the best interests of the company, the Indian taxpayers and the aviation industry. “It is a question of when and not if,” Burroughs said, adding that the Government should focus on getting as competitive a price as it can for the Indian taxpayers.

“This means structuring the deal to appeal to as many bidders as possible, which considering the current lockdown and likely economic impact to come, will be a challenge,” he pointed out.

An industry watcher who declined to be named said that the big draw that AI has for any investor is its international flying rights. “International operations are not going to open up anytime soon and therefore the price discovery will be very shallow,” he said.
29/04/20 Ashwini Phadnis/Business Line
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